Where an employee is provided with a car allowance instead of a company car can this be withdrawn if the employee goes on adoption leave?
Whether or not an employee is entitled to a car allowance during adoption leave is unclear. During adoption leave an employee is entitled to continue to benefit from all the terms and conditions of employment that would have applied had the employee been at work, except for those regarding remuneration. Whether or not a car allowance is "remuneration" for these purposes is unclear. Only sums payable to an employee by way of wages or salary are treated as remuneration (reg.19 of the Paternity and Adoption Leave Regulations 2002 (SI 2002/2788)). It is arguable that a car allowance is a benefit and does not comprise wages or salary for work done, and therefore that the employee should continue to benefit from the car allowance while on adoption leave.
However, it could also be argued that, because a car allowance is a cash benefit and regarded as an uplift on salary attracting national insurance contributions, it constitutes wages or salary and is therefore not payable during adoption leave (this is the view taken by HM Revenue and Customs in guidance documents relating to salary sacrifice and non-cash benefits during maternity leave).